China’s trade surplus has grown to $78bn © AP

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China's trade surplus hit its highest ever monthly level in December, as the country's exports continued to boom during the coronavirus pandemic.

Exports grew 18.1 per cent in dollar terms last month, while imports rose by 6.5 per cent, pushing the trade surplus to a record $78bn. Both exports and imports exceeded forecasts of economists polled by Bloomberg.

China's exports have benefited from higher demand for medical products and lockdown-related goods at a time when global trade has come under intense pressure and other big economies have struggled to cope.

That surge in trade has helped boost China’s economy, which has recovered rapidly from the early impact of the pandemic. Gross domestic product data to be released early next week are expected to show that the Chinese economy expanded 2.1 per cent last year.

Strong export growth, including double-digit increases for three consecutive months, has persisted despite a strengthening of the renminbi, which this month crossed the 6.5 level against the dollar for the first time since 2018

Buoyed by the country’s economic recovery and the lure of higher interest rates, foreign investors rushed to buy Chinese assets over the past year. That led to inflows of about Rmb1tn ($155bn) in 2020 through Hong Kong programmes that connect overseas buyers to the mainland. China’s stock market this month touched its highest level since the global financial crisis.

While China’s market share of global trade jumped in the middle of last year on the back of its swift recovery from the pandemic, analysts suggested it could decline as other countries recovered.

“As the pandemic gets controlled, production elsewhere ramps up and consumers switch to more services consumption, we think China will face more competition,” noted Tao Wang, head of Asia economics research at UBS, this week. 

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But she added that a strong global recovery should still support export growth of about 10 per cent in China this year.

Imports, which in September hit their highest dollar amount on record, have now risen for four consecutive months. China’s industrial-driven recovery has fuelled demand for commodities. Imports of iron ore rose to 1.17bn tonnes in 2020, up 9.5 per cent on the previous year.

Additional reporting by Wang Xueqiao in Shanghai 

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